City Finance staff presented unaudited FY27 current-services projections on Sept. 15 that show a funding gap under a baseline assumption and multiple revenue scenarios tied to local-option sales tax receipts. Finance Director Martha Machar and Deputy Finance Director Rich Donahue outlined wage and benefit pressures, utility and capital costs, and five ongoing but currently unfunded initiatives: a city sidewalk and shared-use-path condition assessment, an economic development plan (and a potential implementation position), the Parks and Open Space Master Plan implementation, Act 250/Tier 1A administration and enforcement, and parking & open-space management in the city center.

Staff walked through revenue scenarios using FY25 actual receipts and assumptions about the city's share of local-option sales and meals & rooms taxes. Anna Dabrowski, data manager, explained staff modeled the FY27 projection from FY25 actuals, applied a one-time shift to 75% of local-option sales tax retention (the city's share will increase from 70% to 75% on Oct. 1), and then modeled modest growth scenarios (0'4%). Under the staff's current-service assumptions, Machar said the projection would require roughly a 5.5% increase in the property tax rate to balance the FY27 current-services budget if council chose not to make further changes.

Councilors questioned the assumptions used for the local-option tax projection and asked staff to provide a sensitivity analysis showing recent receipts (month-by-month and quarter-to-quarter) and the net effect of moving from 70% to 75% retention. Councilor Andrew (full name not specified in transcript) said he would prefer the council aim for a more conservative tax target "limited to inflation," and after additional discussion the council coalesced around guidance to aim near recent inflation figures; the mayor/council consensus direction was to plan for an approximate 3.4% target rather than the higher 5.5% scenario.

Staff also asked council to consider whether and how to include the five unfunded ongoing initiatives in FY27 and to provide any direction about which items to prioritize. Several councilors asked for more detail on the sidewalk/shared-use-path needs and on whether permitting fees should be reviewed to recover more of permitting costs in planning, zoning and related services.

Staff outlined the schedule: departments will submit draft budgets to finance in early October; finance will integrate department inputs and return to council with scenarios in October-November; final adoption is on the city's normal calendar after leadership review. Councilors asked staff to return with: (1) a month-by-month and quarter-by-quarter view of recent local-option receipts, (2) a scenario that nets the 75% retention change with a realistic sales baseline, (3) the effect of using FY25 actuals as the baseline, and (4) options to prioritize the five unfunded initiatives against other budget pressures.